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Analysis: A move towards larger GP practices

Accountant Bob Senior gives his analysis of what the plans to phase out MPIG will mean for GPs

The latest letter from the Department of Health is better than expected, but still will mean a radical change to practice funding.

The correction factor will be removed over a seven year period from April 2014. Many had assumed that the proposed seven-year period would be a maximum period with those practices that receive comparatively small correction factors seeing them wiped out within a year or two.

The proposal that all correction factors, irrespective of amount, will be phased out over seven years is better than was expected.

While it is true that there are many practices with comparatively small correction factors there are also many where the amounts are still very significant. Many of the practices receiving large correction factors are either very small practices, or ones operating from multiple sites.

Moving to a capitation-based funding system will mean that all practices, irrespective of size, are expected to operate at the same economies of scale. The only way to achieve this is for the very small sites to close and their patients moved into larger units, which will undoubtedly upset a lot of patients.

Phasing the correction factor out over seven years may well give enough breathing space to very small practices where partners are in their mid 50’s to hang on until they retire. The Chancellors’ announcement that the pensions’ lifetime allowance will reduce to £1.25m from April 2014 may well accelerate some GPs retirement plans.